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6-Regulation: U.S. may continue WTO case after moratorium ends

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                                  PART I
-------------------------------- GENET-news --------------------------------

TITLE:  U.S. May Continue to Pursue GMO Case At WTO Even if EU Lifts De
        Facto Import Ban
SOURCE: The Bureau of National Affairs, USA, WTO-Reporter
        lead report by Gary G. Yerkey
DATE:   May 15, 2003

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Agriculture U.S. May Continue to Pursue GMO Case At WTO Even if EU Lifts
De Facto Import Ban

The United States May 14 left open the possibility of continuing to
pursue legal action against the European Union in the World Trade
Organization over its de facto ban on imports of genetically modified
organisms (GMOs) even the EU were to lift the ban.

John Veroneau, general counsel at the Office of the U.S. Trade
Representative, said that the U.S. aim in launching WTO dispute
settlement proceedings against the EU, announced on May 13, is to ensure
EU compliance with WTO rules. But he said that compliance would not
necessarily bring an end to the case.

He said that, after 60 days of consultations with the EU to determine if
the dispute can be resolved bilaterally, the United States will move to
ask the WTO to set up a three-person panel to adjudicate the dispute.

U.S. Set to Request WTO Panel

"Absent satisfactory conclusion of those consultations," Veroneau said,
"we will proceed to request a [WTO] panel on this matter."

But Veroneau told reporters that, even if the EU were to lift its
moratorium on approvals of new GMOs while the WTO panel was still
considering the case, the United States could decide to allow the panel
to complete its work rather than to call off the dispute.

He said that "there is precedent [at the WTO] for moving ahead--asking a
panel to reach a final decision--for precedential purposes ... ."

"I'm not saying today that...we would do that," Veroneau said. "That's
something that we'll decide if and when we get to that point."

U.S. Trade Representative Robert B. Zoellick announced May 13 that the
United States was launching WTO dispute settlement proceedings against
the EU over the GMO moratorium--joined by a dozen other countries--
arguing that it violates WTO rules because it is not based on sound science.

He said that, under WTO dispute settlement procedures, the United States
will begin by requesting consultations with the EU--and process that will
last 60 days, i.e., until July 11--and then ask the WTO to set up a panel
to decide whether the EU has violated WTO rules.

A panel typically hands down its decision within nine months of being created.

The panel decision, however, can be appealed to the WTO Appellate Body,
which is required to return its verdict in three months.

A losing party has a reasonable period of time to comply with a WTO
ruling--usually six months to 15 months--so a typical case can take
between 12 months and 18 months to run its course.

European Trade Commissioner Pascal Lamy and other EU officials had called
on the United States to refrain from taking the GMO dispute to the WTO,
arguing that it would further anger European consumers who oppose lifting
the moratorium, imposed in October 1998, on the grounds that GM products
pose a significant danger to public health.

Lamy and the other officials have also said that the EU is poised to
begin resuming approvals of GMOs as early as later this year once new
traceability and labeling regulations have been enacted.

Guenter Burghardt, the head of the European Commission delegation in
Washington, D.C., wrote House Speaker J. Dennis Hastert (R-Ill.) last
month saying that the "legislative framework" for addressing consumer
concerns in Europe was "virtually complete."

"This positive momentum [toward lifting the moratorium]...should not be
countered [by U.S. WTO action against the EU]," Burghardt wrote.

U.S. officials, however, have argued that the traceability and labeling
regulations now being considered by the EU could be unduly burdensome on
commerce depending on how they were written and implemented.

Threat to U.S, EU Trade Relations

Allen Johnson, chief agriculture negotiator at USTR, has said that the
regulations as currently drafted--requiring, among other things, the
labeling of food products with only minimal "adventitious presence" of
GMOs--could threaten U.S.-EU trade relations and could even have "WTO

U.S. officials who briefed reporters May 14, for their part, declined to
say whether the United States would mount a WTO challenge against the
traceability and labeling regulations once they were in place.

One of the officials--Alan P. Larson, undersecretary of state for
economic, business, and agricultural affairs--would only say that the
"details" of any regulatory scheme determine whether it is designed to
properly inform consumers or to "cut off or disrupt trade."

Several EU member states have said that they will lift their opposition
to resuming the GMO approval process as soon as the traceability and
labeling regulations have been implemented, which, according to some EU
officials, could happen as early as this fall.

Larson said that, in the meantime, the United States is confident it will
win the WTO case brought against the approval moratorium.

"I hope that the [European] Commission and the [EU] member states will
keep trying to correct this situation," Larson said. "We would certainly
be pleased if the European Union were to move forward and end this
moratorium and start processing applications for new biotechnology
products. We are not interested in a dispute. We are interested in
resolving disputes."

                                  PART II
-------------------------------- GENET-news --------------------------------

TITLE:  U.S. Opens Legal Proceedings Against EU At WTO Over Moratorium on
        Biotech Imports
SOURCE: The Bureau of National Affairs, USA, WTO-Reporter
        lead report by Gary G. Yerkey and Daniel Pruzin
DATE:   May 14, 2003

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U.S. Opens Legal Proceedings Against EU At WTO Over Moratorium on Biotech

The United States May 13 launched dispute settlement proceedings against
the European Union at the World Trade Organization over its long-standing
moratorium on approvals of genetically modified organisms (GMOs).

U.S. Trade Representative Robert B. Zoellick, who announced his support
for such action in early January, said that the EU's de facto ban on GMO
imports, imposed in 1998, violates WTO rules requiring trade restrictions
to be based on sound science.

"We've waited patiently for five years," Zoellick said. "The EU's
persistent resistance to abiding by its WTO obligations has perpetrated a
trade barrier unwarranted by the [European Commission's] own scientific

Zoellick said that joining the United States in bringing the case will be
Argentina, Canada, and Egypt as co-complainants and nine other
countries--Australia, Chile, Colombia, El Salvador, Honduras, Mexico, New
Zealand, Peru, and Uruguay--as third parties.

He said that the EU moratorium has cost U.S. farmers hundreds of millions
of dollars in lost sales a year.

Pressure to Act in War's Wake

Other U.S. trade officials have been saying for months that the Bush
administration had decided to take the case to the WTO. But the White
House is understood to have held up the process of formally initiating
WTO dispute settlement proceedings pending the conclusion of the conflict
in Iraq.

Members of Congress, however, have been urging the administration in
increasing numbers in recent weeks to act--particularly now that the
Iraqi conflict has ended.

Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance
Committee, stepped up pressure the week of May 5 on the administration to
bring the case, meeting with about a dozen administration officials to
provide them with what he called an "ultimatum" to announce a decision
within two weeks.

"This is a great development," Grassley said in a written statement
issued after the decision to proceed was announced by Zoellick on May 13.
"The administration is standing up for America's farmers against a
misguided policy based on politics, not science.... As chairman of the
Finance Committee, I'll monitor the U.S. case at the WTO closely. If
administration officials fail to fully enforce U.S. rights in this WTO
action, I'll call them to task."

Grassley was joined at a press briefing later in the day by several other
key members of Congress who have also been calling on the administration
to take the dispute to the WTO, including House Speaker J. Dennis Hastert
(R-Ill.); Bob Goodlatte (R-Va.), chairman of the House Agriculture
Committee; William Thomas (R-Calif.), chairman of the House Ways and
Means Committee; and Sen. Craig Thomas (R-Wyo.).

Baucus Supports Bush Position

Sen. Max S. Baucus (D-Mont.), ranking Democrat on the Senate Finance
Committee, issued a separate written statement supporting the
administration's decision, saying it was long overdue.

"For too long, the EU has ignored their commitments to offer genuine
market access to U.S. commodities," Baucus said. "As members of the WTO
continue to push for agriculture reform--against the reluctance of our
European partners, and as farmers around the world struggle amid
chronically distorted markets--the time for an honest, scientifically-
based review of European biotechnology regulations has come."

U.S. officials said that, under WTO procedures, what the United States
has done has been to request consultations with the EU to see if the
dispute can be resolved bilaterally.

Zoellick told reporters May 13 that the United States hopes that the EU
will lift the moratorium on GMO approvals before the 60-day consultation
period with the EU comes to an end. But he said that, if it does not, the
United States will move to the second phase of the WTO dispute settlement
process--i.e., requesting the formation of a three-member WTO panel to
adjudicate the dispute.

In its request for consultations forwarded to the EU trade mission in
Geneva, the United States said that the EU has applied a moratorium on
the approval of biotech products since October 1998--blocking a number of
marketing applications already in the pipeline.

Moreover, according to the United States, EU member states maintain some
marketing and import bans on biotech products even though those products
have already been approved for import into the EU. As a result, the U.S.
request said, the EU measures appear to be inconsistent with Articles 2,
5, 7, and 8, and Annexes B and C, of the WTO's Agreement on Sanitary and
Phytosanitary Measures; Articles I, III, X and XI of the General
Agreement on Tariffs and Trade; Article 4 of the Agreement on
Agriculture; and Articles 2 and 5 of the Agreement on Technical Barriers
to Trade.

Under WTO rules, the losing party in a case has the right to appeal a
panel ruling to the WTO Appellate Body, which is required to hand down
its decision within three months.

Countries have a "reasonable" period of time to comply with a WTO
ruling--generally six months-15 months. And if the two parties disagree
over whether the other has complied or not, a WTO arbitration panel is
asked to step in.

Sanctions can be imposed if the losing party to a dispute fails to comply
with the WTO ruling.

The entire dispute settlement process normally takes 12 months-18 months
to complete.

European Trade Commissioner Pascal Lamy, meanwhile, not surprisingly
blasted the U.S. decision announced May 13, saying that the EU's
regulatory system for authorizing the use of GMOs is in line with WTO rules.

Zoellick Says Dispute Not Rooted in EU Threat

"It is clear, transparent, and non-discriminatory," Lamy said of the
regime. "There is therefore no issue that the WTO needs to examine. The
[United States claims] that there is a so-called 'moratorium,' but the
fact is that the EU has authorized GM varieties in the past and is
currently processing applications. So what is the real U.S. motive in
bringing a case?"

For his part, Zoellick denied suggestions that launching WTO proceedings
over GMOs was linked to the EU threat announced May 7 to begin internal
proceedings that could lead to the imposition of sanctions against the
United States by Jan. 1, 2004, in the U.S.-EU dispute over U.S. tax
breaks for exporters.

"We're bringing this case to the WTO because we've all agreed the WTO is
the place where we should resolve disputes like this," Zoellick said at a
news conference. "It's time to move forward into the legal process...."

Zoellick said that GMO and tax disputes were on "separate tracks," and
that Lamy agrees.

"These are separate issues," he said.

Zoellick said, in the meantime, that news reports suggesting that the EU
has decided to impose trade sanctions against the United States beginning
on Jan. 1 if it fails to comply with the WTO ruling in the tax dispute
are "overplayed."

"[Lamy] has made consistently the same point that I am making today,"
Zoellick said. "Our point is to try to get compliance with the rules. Our
goal is not sanctions."

Other U.S. officials told BNA said that Zoellick and Lamy will likely
discuss the GMO issue--along with other matters, notably the ongoing WTO
trade negotiations--at a meeting in Europe later this week, where both
officials will be attending an economic conference.

European Commissioner for Health and Consumer Protection David Byrne said
that the EU has been working to bring its regulatory system in line with
the "latest scientific and international developments," and that the
process is almost complete.

"This is essential to restore consumer confidence in GMOs in Europe,"
Byrne said, adding that it is the lack of consumer demand for GM-products
that accounts for the low sales of GMOs in the EU market.

"Unless consumers see that the authorization process is up-to-date and
takes into account all legitimate concerns," Byrne said, "consumers will
continue to remain sceptical of GM products."

European Environment Commissioner Margot Wallström said that the U.S.
move is politically unhelpful.

"It can only make an already difficult debate in Europe more difficult,"
she said. "But in the meantime, the Commission strongly believes that we
in Europe should move ahead with completing our legislation on
traceability and labelling and on food and feed, currently before the
European Parliament. We should not be deflected or distracted from
pursuing the right policy for the EU."

WTO Director-General Supachai Panitchpakdi, meanwhile, said in Geneva
that he does not believe the U.S.-EU dispute over GMOs will negatively
impact the WTO trade talks.

Argentine, Canadian Diplomats Partner

He said that, if the U.S. complaint were to go to a WTO panel, "it would
take place along the normal procedural lines. I don't think it would
impair our negotiating process at the moment."

Argentine and Canadian trade diplomats confirmed May 13 that they will
join the United States in seeking WTO consultations with Brussels on the
biotech moratorium.

Canada's ambassador to the WTO, Sergio Marchi, said that he also believes
that the complaint against the EU will not impact the WTO negotiations,
noting that disputes such as the EU complaint against U.S. tax breaks for
exporting companies did not prevent members from launching the so-called
Doha Round of trade talks in November 2001.

"We've held back for a long time, hoping for some improvement in the
situation," Marchi said. "Ultimately, however, you can't wait forever and
continue to deny our constituents' rights under the WTO rules. We've been
treading water on this issue for a long time."

Marchi said that the request for consultation is "just the first stage"
of the process. "We hope the consultations will bear some fruit and lead
to an accommodation," he said.

Argentina's ambassador to the WTO, Alfredo Chiaradia, said that Argentina
has been working closely with the United States on the GMO issue, and
that its request for consultations with the EU would be filed with the
WTO "in a very short time."

"Together with the United States, Argentina is one of the biggest
producers of GMO crops, so we're very interested in eliminating this
source of discrimination against a particular type of product because of
the way it is produced," Chiaradia said. "I don't see this having any
impact on the Doha Round because we've had so many disputes in the past
that have not prevented us from moving ahead with our business. The fact
is that this [EU] moratorium is unacceptable under WTO rules and should
be removed."

Chile's WTO ambassador Alejandro Jara said that his government has not
yet decided on whether to file a request for consultations. He indicated
that Chile may wait to see how the consultations between the EU and the
United States go before deciding on a course of action.

Mexico's WTO ambassador, Eduardo Perez Motta, said that his country would
take part in the consultations but only as third party observers at this

Officials with the trade missions of Australia, Egypt, and Uruguay in
Geneva were unavailable for comment.

Australian Trade Minister Mark Vaile, however, issued a written statement
saying that Australia was supporting the U.S.-led challenge to the EU at
the WTO because his country's agricultural exporters depend on fair
trading rules "underpinned by science-based decision-making, and these
rules must not be undermined."

Advocates Attack

"The case is critical to Australia and all agricultural exporters," Vaile
said. "We must work together to break trade barriers such as this."

U.S. consumer and environmental organizations, quickly criticized the
U.S.-led move to take the case to the WTO.

Lori Wallach, director of Public Citizen's Global Trade Watch, said that
the case will become "Exhibit No. 1 in the growing worldwide attack on
the WTO's legitimacy."

"The fundamental issue here is democracy," Wallach said. "The people
eating the food or living in the environment that could be affected must
decide domestic policy, not some secretive WTO tribunal of three trade

Brent Blackwelder, president of Friends of the Earth, said that, by
filing the case, the Bush administration is catering to the interests of
major biotech corporations rather than human health.

"They have been reduced to using the secretive and undemocratic
procedures of the WTO to try to force people into accepting food they do
not want," Blackwelder said.

But Zoellick said at a news conference that the United States was not
attempting to force biotech food on anyone, "we just want to make sure we
have a fair chance" to sell it in Europe.